February 9, 2018

Proposed law on power plant closings draws critics

BySteve Terrell, Santa Fe New Mexican | February 9, 2018

The San Juan Generating Station, flanked by its surface coal mines on the desert north of the San Juan River west of Farmington, New Mexico. Flickrcc

A bill aimed at easing economic woes of New Mexico communities hit by the closing of large power plants might make it harder to shut down coal-burning operations, some environmentalists said Friday.

House Bill 325, introduced this week by House Minority Whip Rod Montoya, R-Farmington, would require the state Public Regulation Commission to consider the economic effects on communities when deciding cases involving the shuttering of large power sources such as the San Juan Generating Station in northwestern New Mexico.

The bill — which is scheduled to be heard Saturday by the House Judiciary Committee — also would require a utility to build any replacement power source in the same community as the facility it plans to close.

“My bill is about trying to help my community,” Montoya said Friday. He said that about 45 percent of local tax revenue used by the school district in Kirtland comes from the power plant, while another 8 percent comes from the nearby San Juan coal mine.

But Steve Michel of Western Resource Alliance said while his organization supports relief for communities hurt by coal plant closures, Montoya’s bill, as written, has “serious flaws.”

In an email to The New Mexican, Michel said the bill would make it more difficult to shut down coal burners “because it tips the economic analysis in favor of continued operation.”

Also, he said the bill would provide relief to communities “regardless of whether the plant actually closes. Under this bill, a coal plant can continue operating as a merchant plant and there is still an obligation to locate new resources in the county of the closure.

“Not only is that relief unnecessary if the plant is still operating, but because the old plant is continuing to use the infrastructure, it makes the new resources more expensive,” Michel said.

The bill has not won over other environmentalist groups, as well.

Ben Shelton of Conservation Voters New Mexico said his group probably won’t take a position on the bill. But he agreed with at least some of Michel’s arguments. “This bill leaves open a scenario where PNM `abandons’ the plant, sells it, and someone else starts operating it to sell power on the open market. The bill would still trigger, effectively compensating the school district (via property tax receipts) for a value loss that hasn’t actually occurred.”

New Energy Economy, a Santa Fe group that has been a major critic of PNM sent out an alert to supporters, urging them to show up at Saturday’s committee meeting. “We support economic development in San Juan County but not at the expense of ratepayer protections!” New Energy’s email said.

Montoya on Friday said Michel and other environmentalists want to ensure that a power plant like San Juan will never be used as a coal-fueled plant again. “I can’t do that in a bill,” he said. “I can’t tell you what you can do with your property.”

He said that another bill related to the aging San Juan plant — SB 47, which was tabled last week in a Senate committee — would have guaranteed that the property wouldn’t be used again as a coal-burning power plant because it allowed PNM to sell bonds to recover the expenses related to closing the plant by 2022, some 30 years before schedule.

But Montoya said environmentalists are free to negotiate with PNM to work out a plan.

PNM and some environmentalist groups had negotiated terms of SB 47. The utility made several concessions — including a requirement for PNM to supply 40 percent of its energy from renewable sources by 2025 and 50 percent by 2030. But the parties never reached a final consensus on the bill.

PNM is not backing Montoya’s HB 325.

Montoya said his bill responds to complaints that the PNM bill would diminish some of the Public Regulation Commission’s power to regulate utilities. Under Montoya’s bill, he said, the commission would decide how much replacement power would be required following a plant shutdown, as well as which company would win the right to provide that power.

PNM would not be a guaranteed selection to build new power plants, Montoya said.

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